Leo Varadkar (Dublin West, Fine Gael)

The question relates to the temporary lower 9% VAT rate that applies to a range of services in the tourism and leisure sector, including hotels and restaurants. The initiative is aimed at supporting the creation and maintenance of employment as well as helping tourism businesses to lower their cost base. This allows those businesses to offer a more competitive product offering to tourists.

Recent data from the CSO shows that prices as measured in the restaurant and hotels index are at pre-2008 levels, while the recreation and culture index shows prices are at 2006 levels. In pursuing these objectives, I was pleased to see that overseas visitor numbers increased by 6% in 2011. While there has been a marginal reduction in overseas visits in the first three months of 2012, indications from industry representative groups are positive with inquiries and advance bookings for the coming months ahead of those at the same time last year. Tourism Ireland is targeting growth in overseas visitor numbers of 4.5% in 2012.

Following recent discussions with the Minister for Finance, I can confirm to Deputy McHugh that I have obtained his assurance that the lower rate of VAT will be maintained throughout 2013 so that businesses, tour operators and customers alike can continue with their planning for the 2013 season with the assurance that the 9% rate will apply. Moreover, 2013 is the year of The Gathering, during which we hope to bring an extra 325,000 visitors to Ireland, and the lower VAT rate will be an important contribution in this regard. The maintenance of the lower rate, particularly in the context of continued pressure on the public finances, is a further example of the importance which the Government attaches to the tourism industry and the contribution it can make to economic recovery.

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